Ministries view sought on PSUs buying stakes in each other

The Department of Disinvestment (DoD) has sent a Cabinet circular to various ministries to seek their views on the government proposal to raise funds through the buyback option exercised by the public sector undertakings (PSUs).

There are some papers from DoD. We have received a cabinet note (on buyback of Coal India shares) and have to give a reaction to that, said coal secretary Alok Perti on the sidelines of the India Energy Summit organised by the Indian Chamber of Commerce.

Under this mode, the government will allow PSUs with huge cash reserves to acquire stake in each other. The option is one of innovative ways that the government is considering to raise R40,000 crore in this financial year to meet its disinvestment targets.

The department has prepared a list of about two dozen PSUs, including Steel Authority of India (SAIL), Coal India (CIL), NMDC, NTPC, Oil and Natural Gas Corp (ONGC), Oil India and MMTC. According to sources, such companies may be asked to buy back about 5% equity from the shareholders.

Perti said the coal ministry has sought CIL's views before sending any respond to the DoD.

We will react (to the proposal) after seeking Coal India's views, he said.

However, the process may take a long time, thereby, making it difficult for the government to achieve its target this year. So far, it has managed to raise only R1,145 crore through disinvestment.